Listening to Your Customers

In times of slow or stagnant sales, getting in touch with your current, past and future customers can be source for generating business.

Think about it. When sales are strong, we are too busy to stay in touch with our customers. When sales activity is slow, it should remind us of the basics that we have temporarily forgotten. Do a reality check. When was the last time you gave your customers quality time by simply listening?

CURRENT FORCES OF CHANGE

Most businesses are being threatened with major changes. First, the economy is impacting manufacturers and service providers very differently this business cycle than in the past. Second, products are lasting longer, often skipping a complete buying cycle or introducing new competitors. Third, channels-of-distribution shifts have removed or changed selling outlets. Finally, financial pressures have reduced margins. These are challenging times.

On the positive side, changes cause opportunities to emerge. The weak businesses cannot help but strain the relationship with their customers, hence a potential opportunity for new business. Lean manufacturing (removing non-value added effort) is generating substantial cost savings for manufacturers. Process mapping is helping everyone.

Third, not all geographic and product segments have been impacted the same; there are pockets of solid growth. Finally, businesses are introducing new strategies to a low-growth market and are taking market share because they have changed the rules.

The point is this. Despite the current atmosphere in the industry today, there are opportunities for those who listen and dream. There are businesses that visualize beyond today and are creating different business models. Are you one of those businesses?

ANSWERS ARE RIGHT IN FRONT YOU

Do you want more opportunities to pursue? Do you want to impact both revenues and margins? The answer is probably yes. To do so, you are required to both listen and observe the market place. It is creating a dialogue with your customers.

Listening can transform you from where you are today to how things can be tomorrow. What are the customers' needs? How do they want to be served? What are their issues (sources-of-pain)? Where is there waste or non-valued added effort? Address these questions and you will be a valued supplier.

There are many techniques to get customer insight and even test out solutions. Business owners and senior managers should look at the following as ways to listen to their customers:

· Review historic operating data: When you study data in a time-series (i.e.: five continuous years), patterns "jump right at you". Data forces you to see tangible changes, whether it is the addition or loss of customers, shifts in product demand or changes in the cost curve. These changes will lead you to ask other questions until you understand the true cause.

· Interview your customers or prospects: When was the last time you had an in-depth conversation (several hours) with your customer/s, where selling was not a topic? Do you understand your customer's business, strategies, concerns, motivation and willingness to innovate? Knowing and understanding customers is essential.

· Understand the emerging needs: What is occurring outside your immediate market that may impact customer product usage. Longer lasting product life and extended warranties have been an issue for decades; they may be just reaching you. What is next?

· Draw similarities from other industries: Shifting channels-of-distribution are impacting rebuilders today, but the trend to "category killers", worldwide sourcing, e-business and lean manufacturing and Six Sigma have flourished for years in other industries. Are you keeping up-to-date to the world around you?

A personal favorite is personal interviews, whether one-on-one (intense interviews) or in small, single-topic discussions (focus groups). When properly planned and facilitated, both techniques produce "rich and insightful" customer understanding.

When you actively listen to customers, understanding their perspective becomes very clear. While listening, your immediate wants should be secondary. What does the customer want? How does he want to do business? Listening will provide the answers; you have to be smart and insightful enough to develop the appropriate strategies and programs.

ONE-ON-ONE INTERVIEWING

Interviewing is not an easy task; it requires preparation, listening, observing and focused concentration. Using open-ended questions and non-threaten mannerism allow you to create a trusting atmosphere, where the customer will share their deepest thoughts, issues, decision processes or whatever information you are seeking.

Experience teaches that people will naturally talk about the most important issues impacting them. By using clarifying statements and follow-up questions, deep understanding is achieved. During interviewing, pre-testing and evaluating potential solutions can often be accomplished.

Keeping interview notes and writing complete personal notes and observations ensures capturing the essence of the interview. This is an important discipline. Unfortunately, it very easy to get caught up in an interview discussion and not capture all the thoughts on paper. You pay the price later when you cannot remember the details.

TOPIC-ORIENTED FOCUS GROUPS

Focus groups are "common theme" sessions, led by an independent facilitator who keeps the discussion moving forward. What is different from one-on-one interviewing is the broad array of comments from eight-to-twelve people, rather than just one. There are advantages to this technique.

Experience has demonstrated the tremendous value of focus groups. For example, one facilitator was able to clarify customer service issues with a group of distributors. In that session, the group generated solutions, which were implemented by the manufacturer. The distributors even committed to growing sales because of the changes introduced.

In another group, understanding customer product specifications enabled the supplier to expand tolerances and drop costs dramatically. By understanding how the component was being used, the supplier found he was providing too much quality. Customers wanted first-quality parts, but not OE-quality. The focus group led the supplier to make the necessary adjustments to satisfy the market segment.

Interestingly enough, one focus group discovered customers did not want a new product that was ready to be launched nationally. The group did, however, suggest improvements to the existing product lines, which the manufacturer adopted. This prevented a major snafu.

CREATING A COMPETITIVE ADVANTAGE

When businesses improve the quality-of-listening to their customers, success will follow. Open and honest dialogue will uncover underlining thoughts, preferences and wants that never surface when you are selling.

When business is slow, whether due to the economy or seasonal demand, take the time to visit your customers. Ask them about their business and then just listen. Managers and owners need to do this several times a year, if not more. You will learn more visiting customers than staying in the shop. Second, your customers will appreciate it. Finally, your competitors are most likely not making the same effort, so you have gained something just by showing an interest in your customer.

It is also suggested that you invite three groups of 8-to-10 non-competing customers/prospects to your facility. Have a professional facilitate the focus group. Discuss the customers' feedback among your management team and then make the appropriate changes.

To conclude, the solution to your current woes lie right in front you. Ask your customers, listen, digest and plan to leapfrog where you are today into tomorrow.

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Hadley Associates is a consulting firm focused on industrial market research and facilitating strategic change. Drew Hill, principal consultant, is a certified focus group leader and management consultant.